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Inside Self-Storage Magazine 05/2001: Add-On Product Sales

Whenever I conduct an on-site marketing audit of a self-storage facility, one
of the first places I check for unrealized profits is the office. It is one of
the most neglected areas of potential revenue at any facility. Research
indicates the average facility generates approximately 2 percent of its gross
income from sales of "add-on" products. For a facility that grosses
$25,000 a month, that would mean $500 a month in the sale of boxes, locks and
other ancillary items.

I have one client who generates nearly 15 percent of his monthly gross income
in the sale of add-on products. This is almost eight times as much as the
average self-storage facility. Amazing, isn't it? Absolutely. But before I
reveal exactly what he does to achieve these results, let's look at the numbers.

Let's assume you use some of the following suggestions and double your add-on
product sales from 2 percent to 4 percent of your total gross revenue.
Continuing the example given above, your sales would increase from $500 to
$1,000 a month. If you receive a 100 percent markup, you would make an
additional $250 a month. Over the course of a year, this means an additional
$3,000 in net profits. Chances are, you'll make much more.

What Products Should You Carry?

The answer to that question is simply this: whatever your customers will buy!
One of my clients rents carpet cleaners. I wouldn't have thought about this one,
but he kept hearing customers ask about them, so he went out and bought a
couple. In less than a month and a half, they had paid for themselves.

I don't know if carpet cleaners will work in your particular area, but it's
the concept you need to understand. You should carry any products your customers
ask for and are willing to spend money on. If you've established a relationship
with your customers, why not sell them everything they are willing to buy? If
you don't, another vendor will.

Most of what you carry will be standard items: boxes, locks, packing tape,
markers, pallettes and other expected ancillaries. Start with the usual
suspects, then listen to what your customers ask for. Test additional items to
see what works.

Buying Right

Make sure you price shop before you buy anything to sell out of your office.
Get at least three price quotes for any item. To maximize your profits, you have
to buy right.

Check the Internet to find products and compare pricing. I use a search
engine called Dogpile at www.dogpile.com, which is basically a search engine of
search engines. At the site, enter a term like "cardboard boxes" and
hit your return key. You'll find a lot of vendors who sell the products you're
looking for. Go to their sites and check their prices. Call or e-mail them to
get your questions answered.

Your Physical Layout

Every storage office has two areas: the area in front of the counter where
the customers "belong," and the area behind the counter where the
manager has his space. Most facilities devote at least 50 percent of the office
space to the manager's area, and at many facilities it's a lot more. This makes
no sense. All a manager needs to do his job correctly is a computer, phone, fax
machine and a few critical files. Anything else doesn't need to be in the
office--it can be put somewhere else nearby. This way you'll ensure the majority
of your office space is devoted to generating revenue.

When I'm able to help clients design an office before it's built, I devote
anywhere from 70 percent to 80 percent of the space to the sales area (where the
customers are). This leaves the manager with 20 percent to 30 percent of the
space. This is more than enough.

What if you're already set up the "wrong" way? Change your layout.
Move your counter and create more space that can be devoted to selling the
products customers need and want.

Think Convenience Store

To get a feel for how your storage office should look and feel, go visit your
local 7-Eleven franchise. There's a company that understands how to merchandise
products. Follow its lead.

Create aisles with storage-related products in attractive displays. Hang
items nicely on the walls. Don't allow customers to walk into the office and
straight to the counter. Make them walk through the aisles, tempting them to buy
something. Make your office a retail store for storage-related materials.

You should also designate a "discount bin." Throw anything people
may want to buy into this bin--work gloves, for example. People naturally
gravitate toward the discount items. If you can buy them right, you'll still be
able to get a 100 percent markup on them. Take the retail price and mark through
it with a thick red marker and replace it with the discounted price.

Many people will search through this discount bin to buy things, unaware that
your margins on these items are as high as on anything else in the store. Since
it's the "discount" bin, they'll think the prices are great. When
people find out you have great products at great prices in your bin, they'll
come back every time they're at the facility. Your chances for selling them
something will be dramatically increased.

A Sign Over the Manager's Head

When customers walk into your office and see items for sale, they are
immediately suspicious. They're a captive audience. They have no way to compare
prices. What is their immediate assumption? That your prices are inflated.

Whether or not you like it, this is what people are thinking. Rather than
ignore this fact, you should attack the issue head on. Put a sign on the wall
behind the manager that reads, "Our prices on packing and shipping supplies
are lower than anyone's in town, including Wal-Mart." If Wal-Mart isn't an
appropriate example to cite in your area, put the name of the retailer people
would think of for low prices on these kinds of items.

The sign immediately answers the hidden objection most people have. But after
you make this statement, you have to make sure your prices are indeed lower. Go
to your competitors, compare prices for the various items, and undercut them by
a penny or two. Even at those price points, you'll still be able to make $1 for
every $2 sale you make.

Bundling: Your Key to Increased Sales

To significantly increase your sales of add-on products, you need to
understand the concept of bundling. Unless a customer really twists your arm,
don't sell him an individual item. Instead, offer him a price list of bundled
items, showing the significant price advantage of buying a "set" of
boxes or other products.

Create a minimum of three bundles. Price one at $19.95, another at $39.95 and
another at $79.95. (I have seen managers create bundles that are priced even
higher. You'll need to test these in your own market.) Each of these packages
should provide a number of items most people would use together. The $19.95
offer might have a few boxes, two rolls of tape and a marker, for example. Price
these packages so that people will realize a discount. The bigger bundles should
offer bigger discounts.

After you create these packages, list them on a single sheet of paper and
laminate it. When people sign a rental agreement, put the laminated price list
of "bundles" in front of them and say, "Which one of these
packages do you think would work for you?"

Conclusion

Following the above suggestions can generate a lot of additional money from
your storage office. If the only purpose of your office is to give your manager
a warm place to stay during office hours, then buy him a tent! If you're looking
to make every inch of your facility as profitable as possible, utilize your
space to sell add-on products and bring in extra revenue.

Fred Gleeck is a self-storage profit-maximization consultant. He helps
storage owners before and after they get into the business. He is the author of
Secrets of Self Storage Marketing Success--Revealed! and numerous other
training items for self-storage operators. To get regular tips on self-storage,
send him an e-mail at tips@selfstoragesuccess.com;
call 800.345.3325.